HomeCo has sold a large format retail centre in Knoxfield in Melbourne’s east to Troon Group for $45 million, reflecting a 5% fully leased yield.
Located at 1464 Ferntree Gully Road, the 13,603 sqm retail property sat on a 4.3-hectare site of industrial-zoned land.
Stonebridge Property Group agents Justin Dowers and Kevin Tong represented the vendor in the off-market deal.
Dowers said large format retail assets had witnessed a resurgence over the past 18 months, both from a retailer performance and investment demand perspective.
“[Large format retail] assets benefitted from a series of compounding positive attributes including their high degree of convenience/parking and limited enclosed spaces and recent zoning changes (particularly in Victoria), allowing a diverse range of additional convenience ‘daily needs’ and essential services uses for customers,” Dowers said.
“The global pandemic has accentuated the re-positioning of the ‘sectorial hierarchy’ within the Australian commercial real estate landscape.
“Whilst industrial investment has usurped almost all other commercial sectors, the attributes of [large format retail] sector, being the closest in configuration and simplicity to industrial, has not gone unnoticed.”
Tong said there had been a strong uplift in sales performance in key [large format retail] categories.
“The inability to travel overseas has seen people put that money into their homes which is why a number of [large format retail] categories are outperforming at the moment,” Tong said.
“The underlying 4.3ha of industrial zoned land has increased in value significantly over the last few years, which no doubt made this investment a lot more attractive.”
The deal comes after HomeCo’s Daily Needs REIT bought a Dan Murphy’s-anchored retail property in Geelong for $21.5 million last month.
Recent retail deals outside of Victoria include the Riverlakes Village neighbourhood shopping centre in south Brisbane sold for $17.4 million this week, reflecting a passing yield of 5.5%.
Last month, QIC sold its half stake in the Westfield Helensvale shopping centre on the Gold Coast for $185 million, while Woolworths Group sold the Sapphire Marketplace shopping centre in Bega, New South Wales for $54.05 million, representing a 6.5% capitalisation rate.
Retail property transactions reached $2.7 billion across Australia during Q1 2022, down 13% year-on-year, according to Real Capital Analytics.
RCA said the retail sector had continued its recent good run in Q1 2022 despite lower levels compared to Q1 2021, with retail investment up 119% to $19.6 billion during the past 12 months.
